Logica Shares Slump On Worse-Than-Expected Earnings
05 August 2011 - 6:20PM
Dow Jones News
Shares in Logica PLC (LOG.LN slumped Friday after the IT
services company posted worse-than-expected first half results.
The U.K.-based company, which provides consulting, outsourcing
and information technology services to governments and companies
across Europe, said its adjusted operating profit for the six
months to June 30 fell 10% to GBP113 million from GBP125 million in
the prior year, hit by GBP20 million restructuring costs.
At 0743 GMT, Logica shares were down 16 pence, or 15.2%, at 87
pence, the biggest faller on the FTSE 250.
Investec Securities analyst Julian Yates, keeping a sell rating,
said the numbers were a disappointment. "They are worse than what
we assumed in our cautious stance. The results highlight material
weakness in the numbers and outlook."
The share fall comes amid wider stock declines across European
markets which have continued in a global sell-off as investors take
their positions in the wake in of the euro-zone debt crisis and on
fears over the strength of the U.S. economic recovery.
Yates said the company's Benelux operations, hit by a sharp
decline in public sector contracts in the Netherlands, continued to
underperform and is a "loss making" region. He also said its
Swedish and U.K. operations underperformed on margins, hit by the
re-negotiation of large orders.
Operating margin in the half declined to 5.7% from 6.7% a year
earlier. The company, while posting a 7% and 15% increase in sales
and orders respectively for the period, admitted that group margin
improvement is now "dependent" on progress in the Benelux.
In May, strong demand for IT services from the private sector
helped Logica deliver a better-than-expected first-quarter
performance, with the company confident that its embattled U.K.
business would return to growth in the second half of 2011.
However, the group, which has counted Airbus (ABI.YY), Finnair
Oyi AKT (FNNNF), Statoil Hydro SA (STO), Coca-Cola Co. (KO), Cie
Generale des Etablissements Michelin (ML.FR) and the U.K. Ministry
of Defence among its customers, has been hurt by government
spending cuts across Europe, particularly in the U.K.
By Simon Zekaria, Dow Jones Newswires; +44 207 842-9410;
simon.zekaria@dowjones.com
Finnair OYJ (PK) (USOTC:FNNNF)
Historical Stock Chart
From May 2024 to Jun 2024
Finnair OYJ (PK) (USOTC:FNNNF)
Historical Stock Chart
From Jun 2023 to Jun 2024